Spiking food prices have made headlines around the world this year, from eggs in the US to vegetables in India.
The UN Food and Agriculture Organization’s Food Price Index has been slowly increasing over the past six months following declines over much of 2023.
For example, the price of orange juice concentrate in the US was 42% higher in April than it was a year ago, while the price of fresh orange juice in the UK has risen 25% over the last year.
In Greece, the price of olive oil rose by nearly 30% over 2023 and by more than 63% in April of this year.
No single factor alone can explain the rising prices.
But geopolitical conflict, extreme weather events, high input costs and increased demand are all playing a role.
The FAO’s recent Food Outlook report finds that, despite positive forecasts, “global food production systems remain vulnerable to shocks stemming from extreme weather events, geopolitical tensions, policy changes and developments in other markets”.
Carbon Brief has asked a range of scientists and policy experts from around the world what they think are the biggest factors driving spiking global food prices.
These are their responses, first as sample quotes, then, below, in full:
- Prof Elizabeth Robinson: “Whilst one can argue that food crises are not primarily caused by climate or weather, often food price spikes are due to a combination of weather and non-weather related factors.”
- Levi Sucre: “The overexploitation of agricultural lands and the intensive use of agrochemicals have led to a growing need for fertilisers to maintain production, which further increases production costs.”
- Dr Álvaro Lario: “Most food commodity markets present a stable outlook for 2024-25, which should help contain prices for consumers. However…many factors can tip the delicate demand-supply balance.”
- Siraj Hussain: “For long-term and stable food security, the yield has to go up and food losses have to come down.”
- Prof Andrew Challinor: “Put plainly, climate change is beginning to outpace us because it is interacting with our complex interrelated economic and food systems.”
- Dr Rob Vos: “Food prices in global markets are most sensitive to weather conditions and supply disruptions in major producing countries.”
- Prof Alan Matthews: “The rapid recovery of consumer demand following the disruptions caused by the measures to contain the Covid-19 pandemic, extreme weather events, animal disease outbreaks and tight global markets all contributed.”
- Xiomara Paredes: “In short, every time a new regulation is created, it increases production costs, makes market access difficult and thus makes food products more expensive.”
- Dr Manuel Otero: “Food prices have experienced significant increases due to various interrelated economic, social, environmental and political causes.”
- Dr Shouro Dasgupta: “Conflicts are one of the main reasons behind price shocks…Many of these events have also disrupted supply chains and infrastructure.”
Prof Elizabeth Robinson
Director, Grantham Research Institute on Climate Change and the Environment.
London School of Economics and Political Science
Back in 2008, broad underinvestment in the agriculture sector, increasing demand for biofuels, changing diets and speculation – encouraged by declining global food stocks – were already putting longer-term upward pressure on food prices.
The 2008 food crisis was triggered by sequential poor wheat harvests in Australia, a breadbasket country. However, the extreme spike in wheat and rice prices was driven by a combination of export restrictions, panic buying and increased speculation, which amplified the short-term harvest shocks and the longer-term pressures.
More recently, the changing climate, the Covid-19 pandemic and Russia’s invasion of Ukraine have disrupted food production and globally integrated food supply chains, putting rapid upwards pressure on food prices. Whilst one can argue that food crises are not primarily caused by climate or weather, often food price spikes are due to a combination of weather and non-weather related factors.
Earlier this year cocoa prices rapidly increased, a consequence of extreme weather conditions, linked in part to El Niño, resulting in multiple poor harvest seasons in west Africa, combined with longer-term pressures, including disease and ageing cocoa trees, and short-term pressures, particularly speculation, exacerbating the situation further.
Given the changing climate, and in particular increasing extremes of heat and precipitation, food price spikes are likely to be an increasingly common feature of our highly integrated global food systems, in which shocks in one part of the world can relatively easily be amplified and transmitted around the globe.
Levi Sucre
Coordinator
Mesoamerican Alliance of Peoples and Forests
There are several factors causing the increase in food prices worldwide.
Firstly, the high dependency on oil, whose price keeps rising, drives up the costs of food production and transportation. Agricultural machinery, fertilisers and product transportation rely heavily on oil, so any increase in its price directly affects the final cost of food.
Additionally, the overexploitation of agricultural lands and the intensive use of agrochemicals have led to a growing need for fertilisers to maintain production, which further increases production costs.
Monocultures are also degrading the soil, reducing its capacity to produce food sustainably. The lack of crop rotation depletes soil nutrients, diminishing its fertility and forcing farmers to use more fertilisers and pesticides. This not only increases costs but also has negative effects on the environment and health.
The effects of climate change are impacting agricultural production; for example, rising temperatures are disrupting previously predictable agricultural seasons, making crop production more difficult. High temperatures in Mesoamerica continue to destroy crops and reduce food reserves, worsening shortages and driving up prices, affecting nearly 8 million people in El Salvador, Guatemala, Honduras and Nicaragua.
Furthermore, economic injustice, inequality and lack of equity exacerbate the situation. The people with the least resources are the most affected by rising food prices, putting their food security at risk. On the other hand, small-scale producers, who do not use harmful soil practices, do not receive the necessary support to increase their production. These farmers cannot compete with large companies that dominate the market with their monocultures.
Dr Álvaro Lario
President
International Fund for Agricultural Development
International food prices have declined since their historic peak after the start of the war in Ukraine. According to the recently released biennial FAO Food Outlook, most food commodity markets present a stable outlook for 2024-25, which should help contain prices for consumers. But as the report reminds us, many factors can tip the delicate demand-supply balance, impacting food prices and global food security.
The drop in global food prices does not automatically mean that prices have decreased in real terms in local markets, especially considering the strong depreciation of local currencies in most low- and middle-income countries against a robust US dollar.
This is also true for rural communities in these countries, where 80% of the world’s poorest live. In these areas, people can spend up to 70% of their income on food, leaving them with no capacity to absorb any price hikes and pushing them into poverty and hunger. Since Covid-19 emerged, we have seen multiple crises, such as climate change, conflict and record-high food prices, have compounded to push 122 million more people into hunger.
And, despite the current trend, we must remember how fragile our food systems are. They are increasingly threatened by more frequent and intense weather extremes, and volatile geopolitics. Our food systems are overly concentrated on a few crops, countries and producers, and are inefficient, with significant food losses along the value chain and high levels of food waste at the consumer level.
Siraj Hussain
India’s former agricultural secretary. Trustee.
World Food Programme Trust for India
Food inflation has been a source of major concern for a vast majority of Indians.
It is quite an enigma that even cereals, in which India is surplus, have seen double-digit inflation in the last year. Despite the erratic monsoon in 2023, India produced 137m tonnes of rice. Yet in every month since April 2023, the consumer price index inflation for rice was 11-13%.
In the case of wheat, inflation was more than 12% from April to July 2023. The Indian government released 10m tonnes of wheat under an open market sales scheme to cool down wheat prices and the intervention was quite successful as inflation has come down to about 3-7% since July 2023.
The reasons behind inflation in basic cereals of wheat and rice are not well understood. Despite low monsoon rains in 2023-24 due to El Niño, the production of both was not too low in 2023-24. As per the Indian government, wheat production was 113m tonnes.
The real concern in the basket of food inflation comes from vegetables, where inflation in the last year has reached more than 25%. This is attributed to losses in the supply chain from harvesting to marketing. India’s food surpluses are quite small except for rice and sugar. For long-term and stable food security, the yield has to go up and food losses have to come down.
Prof Andy Challinor
Professor of Climate Impacts.
University of Leeds
Every five years, the UK is mandated to report on climate change risks. The scientific evidence for the second of these reports was published in 2017. It highlighted risks from weather-related shocks to international food production and trade as a key risk.
The final report, which is the responsibility of the government, not scientists, endorsed all the conclusions of the evidence report “with the exception of some of those on food security”. The reason? It said: “The government takes a more optimistic view of the levels of resilience that are achieved through functioning markets and diverse sources of supply.”
In the same month that the government response was written, reports of a UK courgette deficit, resulting from climate extremes abroad, soon deepened into wider concerns across a range of vegetables and rationing was commonplace across supermarkets. The World Economic Forum’s 2017 report on global risks identified extreme weather events – already ranked as the most likely global risk in every WEF report since 2014 – as both the most likely and most impactful risk, after weapons of mass destruction.
Skip forward to 2022, when the evidence for the new UK assessment was published. Amongst other additions, an increased underlying vulnerability to climate risk was identified along with a new specific risk of “risk amplification from the interactions and cascades of named risks across systems and geographies”.
The way we as a society (consumers, citizens, government, businesses) choose to set up our food systems has huge implications for stability and resilience – or lack thereof. The 2022 report makes clear that the UK is struggling to keep pace with climate change impacts because of both the pace of change and the way in which the many potential risks to food systems interact with each other.
Put plainly, climate change is beginning to outpace us because it is interacting with our complex interrelated economic and food systems. Until we find ourselves able to look at the big picture and adjust accordingly, we can expect more of the same.
Dr Rob Vos
Director for Markets, Trade and Institutions.
International Food Policy Research Institute
The war in Ukraine caused world market prices for staple foods, especially wheat and vegetable oils, to skyrocket in the first half of 2022. Since then, however, those world market prices have come down to pre-war levels.
At the same time, consumers around the world have felt soaring domestic food price inflation well into 2023. People in some low- and middle-income countries, such as in Argentina, Egypt, Ethiopia, Gaza, Haiti, Sudan, Ukraine and Venezuela, are still seeing the cost of their daily bread and meals going up at high rates today.
What is driving these price fluctuations in global food markets and why are consumer prices not following the same pattern?
Food prices in global markets are most sensitive to weather conditions and supply disruptions in major producing countries. For instance, floods in India caused by the El Niño phenomenon disrupted rice production in India during 2023, pushing up rice prices worldwide.
The war in Ukraine caused shortages in global wheat, maize, sunflower seeds and fertiliser supplies as both Russia and Ukraine are major producers, pushing up wheat, vegetable oil and fertiliser prices.
I should add that the Ukraine war was not the only factor and, in fact, just exacerbated the surge in international food and fertiliser prices induced by the global economic recovery from the Covid-19 recession and the supply chain disruptions (recall the containership pile-up at harbours) that sent oil prices and shipping costs soaring and increasing the cost of farming and food trade worldwide.
Global market prices are further sensitive to misguided policy responses. Governments often respond to expected food supply shortages and price surges by imposing restrictions on exports (such as India’s bans on rice exports in 2023) or lowering import restrictions (as many rice-importing countries did in 2023). While trying to protect their consumers, these “insulation” measures end up just magnifying the price increase.
Why do domestic food prices not necessarily follow the same pattern?
In fact, most countries are relatively insulated from global price shocks as they rely predominantly on their own food production to feed their populations; typically, only 10-15% or less of food consumption is imported.
Domestic conditions for food production and distribution systems thus matter more than global prices. These conditions vary across countries, but countries with the highest rates of consumer price inflation have seen food systems disrupted by intensified conflict (as in Ethiopia, Gaza, Haiti and Sudan, for instance) and those suffering macroeconomic constraints and weak currencies that have kept both general and food price inflation high (e.g. Argentina, Venezuela, Turkey, and many highly indebted low-income countries).
Prof Alan Matthews
Professor Emeritus of European Agricultural Policy
University of Dublin Trinity College
Food prices in the EU rose dramatically in 2022 and 2023. EU food prices were 41% higher in May 2023 relative to the price level in 2015, while the overall price level rose by just 26% during this period. The monthly annual rate of food price inflation peaked at 19.2% in the EU in March 2023.
Even higher rates were recorded in central and eastern Europe, with Hungary a particular outlier, with food price inflation of 46% in February 2023. Since then, food prices have not fallen, but are now increasing at a rate below the general inflation rate for the first time in two years.
There have been multiple drivers of this food price inflation. The rapid recovery of consumer demand following the disruptions caused by the measures to contain the Covid-19 pandemic, extreme weather events, animal disease outbreaks and tight global markets all contributed.
For Europe, the impact of the Russian invasion of Ukraine has been particularly important. There was a direct impact through the increased price of energy, and thus fertilisers and fuel, given the EU’s dependence on imports particularly of Russian gas, but also an indirect impact through the knock-on effect of higher world market crop prices due to the subsequent curtailment of Ukrainian exports to the world market.
Extreme weather events have contributed to food price increases. High temperatures and drought badly affected olive oil production in 2022-23 as well as production of cereals in southern Europe, while heavy rains and wet weather have delayed planting and harvests and damaged fruit quality in northern Europe.
Despite these production losses, a March 2024 study in Communications Earth & Environment estimated that the 2022 extreme summer heat had increased food inflation in Europe by 0.43-0.93 percentage points – so making a relatively minor contribution to the overall 19% increase in food prices at that time. Nonetheless, in more normal times that would cause a more noticeable uptick in food prices, and the authors suggest that the warming projected for 2035 could amplify these numbers by 30-50%.
Xiomara Paredes
Executive Director, Latin American and Caribbean Coordinating Association of Small Fair Trade Producers and Workers
The new regulations that the EU has recently implemented, such as the deforestation-free regulation, changes in organic regulation, human rights and environmental due diligence, entail the investment of additional resources, thus raising production costs.
For example, to comply with the deforestation-free regulation, producers must first invest in geolocation equipment and have technical staff who can survey the points or polygons on the plots of each producer member of the organisation. Geolocating all the producers’ plots also takes time and effort that must be diluted in the installed capacity of the producer organisations.
In short, every time a new regulation is created, it increases production costs, makes market access difficult and thus makes food products more expensive.
Dr Shouro Dasgupta
Environmental Economist
Fondazione CMCC
Visiting Senior Fellow
Grantham Research Institute, LSE
The issue of increasing food prices is multifaceted and is due to a complex set of reasons including conflicts, climate change and supply chain disruptions.
Conflicts are one of the main reasons behind price shocks. For instance, Russia’s invasion of Ukraine, known as the breadbasket of Europe, has substantially reduced exports of wheat, maize and sunflower, resulting in food price fluctuations. While global food prices have decreased from their peak levels at the onset of the conflict, they remain higher than the pre-conflict levels.
Climate change, manifested by increasing temperatures and the increasing intensity and frequency of extreme events such as heatwaves, droughts and floods, has led to crop failures and reduced yields in many parts of the world. This, in turn, has pushed up food prices through supply shocks.
Many of these events have also disrupted supply chains and infrastructure, such as roads, and lowered water levels of major rivers such as the Rhine. Whether due to conflicts or climate change, several countries have imposed export bans on major agricultural commodities (for example, India, Myanmar and Russia on rice; Thailand on sugar; Argentina on beef). These restrictions affect countries that are highly dependent on imports the most.
Several policy failures in the global food system also contribute to food inflation. One such issue is the inadequacy of storage facilities, especially in low- and middle-income countries. Another is the concentration of food production in certain regions and on selected crops (60% of the plant-based calorie intake is provided by rice, wheat and maize) and the fact that global food chains are dominated by a small number of multinational corporations.
Dr Manuel Otero
Director-general, Inter-American Institute for Cooperation on Agriculture
In recent years, food prices have experienced significant increases due to various interrelated economic, social, environmental and political causes. Armed conflicts have disrupted supply chains and food production and distribution, exacerbating shortages and driving up prices. These conflicts have also displaced millions of people, affecting their ability to produce and access food.
Economic shocks, such as the Covid-19 pandemic and its repercussions, plus the slowdown of economies, have reduced consumers’ purchasing power, decreasing incomes and increasing unemployment, which has raised relative demand and prices.
Extreme weather events, such as droughts and storms, have affected agricultural production, reducing supply and increasing production costs, resulting in higher prices for consumers. Volatility in fertiliser markets, driven by trade restrictions and armed conflict, has also increased agricultural production costs, reflected in higher prices for food products.
Trade restrictions, such as export bans, have exacerbated the global food crisis, limiting international food trade and further driving up prices in global markets. According to our Observatory of Public Policies for Agrifood Systems tool, since the pandemic, food inflation has reached 28% annually on a global average – compared to a general inflation of 19% annually.
This is despite the fact that international food prices fell 9% annually for the same comparison period, suggesting that other economic, political and environmental factors contribute to food inflation.
Latin America and the Caribbean is home to 16 net-exporting and 16 net-food-importing countries, so the region has benefited from the increase in international food prices, but has also been one of the most affected by food insecurity due to factors such as increasing poverty.
The post Experts: What is causing food prices to spike around the world? appeared first on Carbon Brief.
Experts: What is causing food prices to spike around the world?
In 2026, the dangers of fossil fuel dependence have been laid bare like never before. The illegal invasion of Iran has brought pain and destruction to millions across the Middle East and triggered a global energy crisis impacting us all. Communities in the Pacific have been hit especially hard by rising fuel prices, and Australians have seen their cost-of-living woes deepen.
Such moments of crisis and upheaval can lead to positive transformation. But only when leaders act with courage and foresight.
There is no clearer statement of a government’s plans and priorities for the nation than its budget — how it plans to raise money, and what services, communities, and industries it will invest in.
As we count down the days to the 2026-27 Federal Budget, will the Albanese Government deliver a budget for our times? One that starts breaking the shackles of fossil fuels, accelerates the shift to clean energy, protects nature, and sees us work together with other countries towards a safer future for all? Or one that doubles down on coal and gas, locks in more climate chaos, and keeps us beholden to the whims of tyrants and billionaires.
Here’s what we think the moment demands, and what we’ll be looking out for when Treasurer Jim Chalmers steps up to the dispatch box on 12 May.
1. Stop fuelling the fire
2. Make big polluters pay
3. Support everyone to be part of the solution
4. Build the industries of the future
5. Build community resilience
6. Be a better neighbour
7. Protect nature
1. Stop fuelling the fire
In mid-April, Pacific governments and civil society met to redouble their efforts towards a Fossil Fuel Free Pacific. Moving beyond coal, oil and gas is fundamental to limiting warming to 1.5°C — a survival line for vulnerable communities and ecosystems. And as our Head of Pacific, Shiva Gounden, explained, it is “also a path of liberation that frees us from expensive, extractive and polluting fossil fuel imports and uplifts our communities”.
Pacific countries are at the forefront of growing global momentum towards a just transition away from fossil fuels, and it is way past time for Australia to get with the program. It is no longer a question of whether fossil fuel extraction will end, but whether that end will be appropriately managed and see communities supported through the transition, or whether it will be chaotic and disruptive.
So will this budget support the transition away from fossil fuels, or will it continue to prop up coal and gas?
When it comes to sensible moves the government can make right now, one stands out as a genuine low hanging fruit. Mining companies get a full rebate of the excise (or tax) that the rest of us pay on diesel fuel. This lowers their operating costs and acts as a large, ongoing subsidy on fossil fuel production — to the tune of $11 billion a year!
Greenpeace has long called for coal and gas companies to be removed from this outdated scheme, and for the billions in savings to be used to support the clean energy transition and to assist communities with adapting to the impacts of climate change. Will we see the government finally make this long overdue change, or will it once again cave to the fossil fuel lobby?
2. Make big polluters pay
While our communities continue to suffer the escalating costs of climate-fuelled disasters, our Government continues to support a massive expansion of Australia’s export gas industry. Gas is a dangerous fossil fuel, with every tonne of Australian gas adding to the global heating that endangers us all.
Moreover, companies like Santos and Woodside pay very little tax for the privilege of digging up and selling Australians’ natural endowment of fossil gas. Remarkably, the Government currently raises more tax from beer than from the Petroleum Resource Rent Tax (PRRT) — the main tax on gas profits.
Momentum has been building to replace or supplement the PRRT with a 25% tax on gas exports. This could raise up to $17 billion a year — funds that, like savings from removing the diesel tax rebate for coal and gas companies, could be spent on supporting the clean energy transition and assisting communities with adapting to worsening fires, floods, heatwaves and other impacts of climate change.
As politicians arrive in Canberra for budget week, they will be confronted by billboards calling for a fair tax on gas exports. The push now has the support of dozens of organisations and a growing number of politicians. Let’s hope the Treasurer seizes this rare window for reform.
3. Support everyone to be part of the solution
As the price of petrol and diesel rises, electric vehicles (EVs) are helping people cut fuel use and save money. However, while EV sales have jumped since the invasion of Iran sent fuel prices rising, they still only make up a fraction of total new car sales. This budget should help more Australians switch to electric vehicles and, even more importantly, enable more Australians to get around by bike, on foot, and on public transport. This means maintaining the EV discount, investing in public and active transport, and removing tax breaks for fuel-hungry utes and vans.
Millions of Australians already enjoy the cost-saving benefits of rooftop solar, batteries, and getting off gas. This budget should enable more households, and in particular those on lower incomes, to access these benefits. This means maintaining the Cheaper Home Batteries Program, and building on the Household Energy Upgrades Fund.
4. Build the industries of the future
If we’re to transition away from fossil fuels, we need to be building the clean industries of the future.
No state is more pivotal to Australia’s energy and industrial transformation than Western Australia. The state has unrivaled potential for renewable energy development and for replacing fossil fuel exports with clean exports like green iron. Such industries offer Western Australia the promise of a vibrant economic future, and for Australia to play an outsized positive role in the world’s efforts to reduce emissions.
However, realising this potential will require focussed support from the Federal Government. Among other measures, Greenpeace has recommended establishing the Australasian Green Iron Corporation as a joint venture between the Australian and Western Australian governments, a key trading partner, a major iron ore miner and steel makers. This would unite these central players around the complex task of building a large-scale green iron industry, and unleash Western Australia’s potential as a green industrial powerhouse.
5. Build community resilience
Believe it or not, our Government continues to spend far more on subsidising fossil fuel production — and on clearing up after climate-fuelled disasters — than it does on helping communities and industries reduce disaster costs through practical, proven methods for building their resilience.
Last year, the Government estimated that the cost of recovery from disasters like the devastating 2022 east coast floods on 2019-20 fires will rise to $13.5 billion. For contrast, the Government’s Disaster Ready Fund – the main national source of funding for disaster resilience – invests just $200 million a year in grants to support disaster preparedness and resilience building. This is despite the Government’s own National Emergency Management Agency (NEMA) estimating that for every dollar spent on disaster risk reduction, there is a $9.60 return on investment.
By redirecting funds currently spent on subsidising fossil fuel production, the Government can both stop incentivising climate destruction in the first place, and ensure that Australian communities and industries are better protected from worsening climate extremes.
No communities have more to lose from climate damage, or carry more knowledge of practical solutions, than Aboriginal and Torres Strait Islander peoples. The budget should include a dedicated First Nations climate adaptation fund, ensuring First Nations communities can develop solutions on their own terms, and access the support they need with adapting to extreme heat, coastal erosion and other escalating challenges.
6. Be a better neighbour
The global response to climate change depends on the adequate flow of support from developed economies like Australia to lower income nations with shifting to clean energy, adapting to the impacts of climate change, and addressing loss and damage.
Such support is vital to building trust and cooperation, reducing global emissions, and supporting regional and global security by enabling countries to transition away from fossil fuels and build greater resilience.
Despite its central leadership role in this year’s global climate negotiations, our Government is yet to announce its contribution to international climate finance for 2025-2030. Greenpeace recommends a commitment of $11 billion for this five year period, which is aligned with the global goal under the Paris Agreement to triple international climate finance from current levels.
This new commitment should include additional funding to address loss and damage from climate change and a substantial contribution to the Pacific Resilience Facility, ensuring support is accessible to countries and communities that need it most. It should also see Australia get firmly behind the vision of a Fossil Fuel Free Pacific.
7. Protect nature
There is no safe planet without protection of the ecosystems and biodiversity that sustain us and regulate our climate.
Last year the Parliament passed important and long overdue reforms to our national environment laws to ensure better protection for our forests and other critical ecosystems. However, the Government will need to provide sufficient funding to ensure the effective implementation of these reforms.
Greenpeace has recommended $500 million over four years to establish the National Environment Agency — the body responsible for enforcing and monitoring the new laws — and a further $50 million to Environment Information Australia for providing critical information and tools.
Further resourcing will also be required to fulfil the crucial goal of fully protecting 30% of Australian land and seas by 2030. This should include $1 billion towards ending deforestation by enabling farmers and loggers to retool away from destructive practices, $2 billion a year for restoring degraded lands, $5 billion for purchasing and creating new protected areas, and $200 million for expanding domestic and international marine protected areas.
Conclusion
This is not the first time that conflict overseas has triggered an energy crisis, or that a budget has been preceded by a summer of extreme weather disasters, highlighting the urgent need to phase out fossil fuels. What’s different in 2026 is the availability of solutions. Renewable energy is now cheaper and more accessible than ever before. Global momentum is firmly behind the transition away from fossil fuels. The Albanese Government, with its overwhelming majority, has the chance to set our nation up for the future, or keep us stranded in the past. Let’s hope it makes some smart choices.
The 2026 budget test: Will Australia break free from fossil fuels?
Anne Jellema is Executive Director of 350.org.
The war on Iran and Lebanon is a deeply unjust and devastating conflict, killing civilians at home, destroying lives, and at the same time sending shockwaves through the global economy. We, at 350.org, have calculated, drawing on price forecasts from the International Monetary Fund (IMF) and Goldman Sachs, just how much that volatility is costing us.
Even under the IMF’s baseline scenario – a de facto “best case” scenario with a near-term end to the war and related supply chain disruptions – oil and gas price spikes are projected to cost households and businesses globally more than $600 billion by the end of the year. Under the IMF’s “adverse scenario”, with prolonged conflict and sustained price pressures, we estimate those additional costs could exceed $1 trillion, even after accounting for reduced demand.
Which is why we urgently need a power shift. Governments are under growing pressure to respond to rising fuel and food costs and deepening energy poverty. And it’s becoming clearer to both voters and elected officials that fossil dependence is not only expensive and risky, but unnecessary.
People who can are voting with their wallets: sales of solar panels and electric vehicles are increasing sharply in many countries. But the working people who have nothing to spare, ironically, are the ones stuck with using oil and gas that is either exorbitantly expensive or simply impossible to get.
Drain on households and economies
In India, street food vendors can’t get cooking gas and in the Philippines, fishermen can’t afford to take their boats to sea. A quarter of British people say that rising energy tariffs will leave them completely unable to pay their bills. This is the moment for a global push to bring abundant and affordable clean energy to all.
In April, we released Out of Pocket, our new research report on how fossil fuels are draining households and economies. We were surprised by the scale of what we found. For decades, governments have reassured people that energy price spikes are unfortunate but unavoidable – the result of distant conflicts, market forces or geopolitical shocks beyond anyone’s control. But the numbers tell a different story.
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Santa Marta: Ministers grapple with practicalities of fossil fuel phase-out
Around 60 governments that want to make progress on transitioning away from coal, oil and gas are meeting in Colombia to work out how they can do it an equitable way -
Why the transition beyond fossil fuels depends on cities and collective action
Cities will help identify concrete pathways for an equitable shift to clean energy at the Santa Marta conference, with C40 members aiming to halve their fossil fuel use by 2030
What we are living through today is not an energy crisis. It is a fossil fuel crisis. In just the first 50 days of the Middle East conflict, soaring oil and gas prices have siphoned an estimated $158 billion–$166 billion from households and businesses worldwide. That is money extracted directly from people’s pockets and transferred, almost instantly, into fossil fuel company balance sheets. And this figure only captures the immediate impact of price spikes, not the permanent economic drain of fossil dependence. Fossil fuels don’t just cost us once, they cost us over and over again.
First, through our bills. Every time there is a war, an embargo or a supply disruption, fossil fuel prices surge. For ordinary people, this means higher costs for energy, transport and food. Many Global South countries have little or no fiscal space to buffer the shock; instead, workers and families pay the price.
Second, through our taxes. Governments around the world continue to pour vast sums of public money into fossil fuel subsidies. These are often justified as a way to protect the most vulnerable at the petrol pump or in their homes. But in reality, the benefits are overwhelmingly captured by wealthier households and corporations. The poorest 20% receive just a fraction of this support, while public finances are drained.
Third, through climate impacts. New research across more than 24,000 global locations gives a granular account of the true costs of extreme heat, sea level rise and falling agricultural yields. Using this data to update IMF modelling of the social cost of carbon, we found that fossil fuel impacts on health and livelihoods amount to over $9 trillion a year. This is the biggest subsidy of all, because these massive and mounting costs are not charged to Big Oil – they are paid for by governments and households, with the poorest shouldering the lion’s share.
Massive transfer of wealth to fossil fuel industry
Adding up direct subsidies, tax breaks and the unpaid bill for climate damages, the total transfer of wealth from the public to the fossil fuel industry amounts to $12 trillion even in a “normal” year without a global oil shock. That’s more than 50% higher than the IMF has previously estimated, and equivalent to a staggering $23 million a minute.
The fossil fuel industry has become extraordinarily adept at profiting from instability. When conflict drives up prices, companies do not lose, they gain. In the current crisis, oil producers and commodity traders are on track to secure tens of billions of dollars in additional windfall profits, even as households face rising bills and governments struggle to manage the fallout.
Fossil fuel crisis offers chance to speed up energy transition, ministers say
This growing disconnect is impossible to ignore. Investors are advised to buy into fossil fuel firms precisely because of their ability to generate profits in times of crisis. Meanwhile, ordinary people are told to tighten their belts.
In 2026, unlike during the oil shocks of the 1970s, clean energy is no longer a distant alternative. Now, even more than when gas prices spiked due to Russia’s invasion of Ukraine in 2022, renewables are often the cheapest option available. Solar and wind can be deployed quickly, at scale, and without the volatility that defines fossil fuel markets.
How to transition from dirty to clean energy
The solutions are clear. Governments must implement permanent windfall taxes on fossil fuel companies to ensure that extraordinary profits generated during crises are redirected to support households. These revenues can be used to reduce energy bills, invest in public services, and accelerate the rollout of clean energy.
Second, we must shift subsidies away from fossil fuels and towards renewable solutions, particularly those that can be deployed quickly and equitably, such as rooftop and community solar. This is not just about cutting emissions. It is about building a more stable, fair and resilient energy system.
Finally, we need binding plans to phase out fossil fuels altogether, replacing them with homegrown renewable energy that can shield economies from future shocks. Because what the current crisis has made clear is this: as long as we remain dependent on fossil fuels, we remain vulnerable – to conflict, to price volatility and to the escalating impacts of climate change.
The true price of fossil fuels is no longer hidden. It is visible in rising bills, strained public finances and communities pushed to the brink. And it is being paid, every day, by ordinary people around the world.
It’s time for the great power shift.
Full details on the methodology used for this report are available here.
The Great Power Shift is a new campaign by 350.org global campaign to pressure governments to bring down energy bills for good by ending fossil fuel dependence and investing in clean, affordable energy for all
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Computer models that use artificial intelligence (AI) cannot forecast record-breaking weather as well as traditional climate models, according to a new study.
It is well established that AI climate models have surpassed traditional, physics-based climate models for some aspects of weather forecasting.
However, new research published in Science Advances finds that AI models still “underperform” in forecasting record-breaking extreme weather events.
The authors tested how well both AI and traditional weather models could simulate thousands of record-breaking hot, cold and windy events that were recorded in 2018 and 2020.
They find that AI models underestimate both the frequency and intensity of record-breaking events.
A study author tells Carbon Brief that the analysis is a “warning shot” against replacing traditional models with AI models for weather forecasting “too quickly”.
AI weather forecasts
Extreme weather events, such as floods, heatwaves and storms, drive hundreds of billions of dollars in damages every year through the destruction of cropland, impacts on infrastructure and the loss of human life.
Many governments have developed early warning systems to prepare the general public and mobilise disaster response teams for imminent extreme weather events. These systems have been shown to minimise damages and save lives.
For decades, scientists have used numerical weather prediction models to simulate the weather days, or weeks, in advance.
These models rely on a series of complex equations that reproduce processes in the atmosphere and ocean. The equations are rooted in fundamental laws of physics, based on decades of research by climate scientists. As a result, these models are referred to as “physics-based” models.
However, AI-based climate models are gaining popularity as an alternative for weather forecasting.
Instead of using physics, these models use a statistical approach. Scientists present AI models with a large batch of historical weather data, known as training data, which teaches the model to recognise patterns and make predictions.
To produce a new forecast, the AI model draws on this bank of knowledge and follows the patterns that it knows.
There are many advantages to AI weather forecasts. For example, they use less computing power than physics-based models, because they do not have to run thousands of mathematical equations.
Furthermore, many AI models have been found to perform better than traditional physics-based models at weather forecasts.
However, these models also have drawbacks.
Study author Prof Sebastian Engelke, a professor at the research institute for statistics and information science at the University of Geneva, tells Carbon Brief that AI models “depend strongly on the training data” and are “relatively constrained to the range of this dataset”.
In other words, AI models struggle to simulate brand new weather patterns, instead tending forecast events of a similar strength to those seen before. As a result, it is unclear whether AI models can simulate unprecedented, record-breaking extreme events that, by definition, have never been seen before.
Record-breaking extremes
Extreme weather events are becoming more intense and frequent as the climate warms. Record-shattering extremes – those that break existing records by large margins – are also becoming more regular.
For example, during a 2021 heatwave in north-western US and Canada, local temperature records were broken by up to 5C. According to one study, the heatwave would have been “impossible” without human-caused climate change.
The new study explores how accurately AI and physics-based models can forecast such record-breaking extremes.
First, the authors identified every heat, cold and wind event in 2018 and 2020 that broke a record previously set between 1979 and 2017. (They chose these years due to data availability.) The authors use ERA5 reanalysis data to identify these records.
This produced a large sample size of record-breaking events. For the year 2020, the authors identified around 160,000 heat, 33,000 cold and 53,000 wind records, spread across different seasons and world regions.
For their traditional, physics-based model, the authors selected the High RESolution forecast model from the Integrated Forecasting System of the European Centre for Medium-Range Weather Forecasts. This is “widely considered as the leading physics-based numerical weather prediction model”, according to the paper.
They also selected three “leading” AI weather models – the GraphCast model from Google Deepmind, Pangu-Weather developed by Huawei Cloud and the Fuxi model, developed by a team from Shanghai.
The authors then assessed how accurately each model could forecast the extremes observed in the year 2020.
Dr Zhongwei Zhang is the lead author on the study and a researcher at Karlsruhe Institute of Technology. He tells Carbon Brief that many AI weather forecast models were built for “general weather conditions”, as they use all historical weather data to train the models. Meanwhile, forecasting extremes is considered a “secondary task” by the models.
The authors explored a range of different “lead times” – in other words, how far into the future the model is forecasting. For example, a lead time of two days could mean the model uses the weather conditions at midnight on 1 January to simulate weather conditions at midnight on 3 January.
The plot below shows how accurately the models forecasted all extreme events (left) and heat extremes (right) under different lead times. This is measured using “root mean square error” – a metric of how accurate a model is, where a lower value indicates lower error and higher accuracy.
The chart on the left shows how two of the AI models (blue and green) performed better than the physics-based model (black) when forecasting all weather across the year 2020.
However, the chart on the right illustrates how the physics-based model (black) performed better than all three AI models (blue, red and green) when it came to forecasting heat extremes.
The authors note that the performance gap between AI and physics-based models is widest for lower lead times, indicating that AI models have greater difficulty making predictions in the near future.
They find similar results for cold and wind records.
In addition, the authors find that AI models generally “underpredict” temperature during heat records and “overpredict” during cold records.
The study finds that the larger the margin that the record is broken by, the less well the AI model predicts the intensity of the event.
‘Warning shot’
Study author Prof Erich Fischer is a climate scientist at ETH Zurich and a Carbon Brief contributing editor. He tells Carbon Brief that the result is “not unexpected”.
He adds that the analysis is a “warning shot” against replacing traditional models with AI models for weather forecasting “too quickly”.
The analysis, he continues, is a “warning shot” against replacing traditional models with AI models for weather forecasting “too quickly”.
AI models are likely to continue to improve, but scientists should “not yet” fully replace traditional forecasting models with AI ones, according to Fischer.
He explains that accurate forecasts are “most needed” in the runup to potential record-breaking extremes, because they are the trigger for early warning systems that help minimise damages caused by extreme weather.
Leonardo Olivetti is a PhD student at Uppsala University, who has published work on AI weather forecasting and was not involved in the study.
He tells Carbon Brief that “many other studies” have identified issues with using AI models for “extremes”, but this paper is novel for its specific focus on extremes.
Olivetti notes that AI models are already used alongside physics-based models at “some of the major weather forecasting centres around the world”. However, the study results suggest “caution against relying too heavily on these [AI] models”, he says.
Prof Martin Schultz, a professor in computational earth system science at the University of Cologne who was not involved in the study, tells Carbon Brief that the results of the analysis are “very interesting, but not too surprising”.
He adds that the study “justifies the continued use of classical numerical weather models in operational forecasts, in spite of their tremendous computational costs”.
Advances in forecasting
The field of AI weather forecasting is evolving rapidly.
Olivetti notes that the three AI models tested in the study are an “older generation” of AI models. In the last two years, newer “probabilistic” forecast models have emerged that “claim to better capture extremes”, he explains.
The three AI models used in the analysis are “deterministic”, meaning that they only simulate one possible future outcome.
In contrast, study author Engelke tells Carbon Brief that probabilistic models “create several possible future states of the weather” and are therefore more likely to capture record-breaking extremes.
Engelke says it is “important” to evaluate the newer generation of models for their ability to forecast weather extremes.
He adds that this paper has set out a “protocol” for testing the ability of AI models to predict unprecedented extreme events, which he hopes other researchers will go on to use.
The study says that another “promising direction” for future research is to develop models that combine aspects of traditional, physics-based weather forecasts with AI models.
Engelke says this approach would be “best of both worlds”, as it would combine the ability of physics-based models to simulate record-breaking weather with the computational efficiency of AI models.
Dr Kyle Hilburn, a research scientist at Colorado State University, notes that the study does not address extreme rainfall, which he says “presents challenges for both modelling and observing”. This, he says, is an “important” area for future research.
The post Traditional models still ‘outperform AI’ for extreme weather forecasts appeared first on Carbon Brief.
Traditional models still ‘outperform AI’ for extreme weather forecasts
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